The Fed chief said last month's jobs report was "disappointing" and bears watching, though she gave a largely upbeat assessment of the U.S. economic outlook, warning against attaching too much significance to the payrolls data in isolation.

In the absence of a timing hint from Yellen, some traders took the view that a July rate hike had become less likely.

"Even though Yellen didn't explicitly say so, it sounds as if a rate hike in June and July, which she had talked about, is becoming difficult," said Nobuyasu Atago, chief economist at Okasan Securities.

Money market futures reduced bets on a July rate hike further, to around 20 percent, from 30 percent following Yellen's comments. They were pricing in about 60 percent chances of a rate hike by July before Friday's weak payrolls data.

On the other hand, they continue to price in one rate hike by the end of year.

U.S. S&P 500 Index closed up 0.49 percent to 2,109.41, just about one percentage point below a record closing high of 2,130.82.

World equity markets were higher, and MSCI's all-country world equity index rose 0.53 percent for a third straight gaining session to a six-week high on Monday.

The dollar briefly dipped following Yellen's comments, though it pared much of its losses by early Asian trade.

The dollar index hit a four-week low of 93.745 before bouncing back to 94.037.

The euro eased to $1.1356 after having scaled a four-week high of $1.3930, while the yen also stepped back to 107.545 per dollar from Monday's five-week high of 106.35.

The Australian dollar changed hands at $0.7371, below Monday's four-week peak of $0.7392 ahead of the Reserve Bank of Australia's policy decision at 0430 GMT.

The central bank is widely expected to keep rates on hold after a rate cut last month.

The British pound hovered above Monday's three-week low, but with various polls showing support for a British exit from the European Union almost neck and neck with the "remain" camp, implied volatilities on pound options are soaring.

The pound traded at $1.4459, off its low of $1.4352 touched in early Asian trade on Monday. One-month volatility rose above 22 percent, highest level since early 2009.

Concerns about a "Brexit" are also spilling over to European debt markets.

German Bund yield hit a one-year low, coming within sight of a record low of 0.05 percent, while Italian and Spanish debt yields rose on rise in support for anti-establishment political parties.

Elsewhere, oil prices held firm on crippling attacks on Nigeria's oil industry and fresh draws in U.S. crude stockpiles.

Global crude benchmark Brent futures hit a seven-month high of $50.83 per barrel on Monday before easing a tad to $50.44 in early Tuesday.

U.S. West Texas Intermediate (WTI) crude stood little changed in early Asia at $49.63 per barrel, after having gained 2.2 percent on Monday, its largest gain in three weeks.